Stock Dividends
Definition: Dividends paid in shares
Scope:NarrowDifficulty:Moderate
Part of: Retained Earnings
Dividends paid in shares
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Small stock dividend (< 25%) | ||
| Declare 10% dividend: 1,000 new shares, $1 par, FMV $15. | ||
| Retained EarningsEquity− | $15,000 | |
| Common Stock Distributable | $1,000 | |
| Additional Paid-In CapitalEquity+ | $14,000 | |
| Small dividend recorded at fair market value. | ||
| 2. Issue the shares | ||
| Distribute the 1,000 shares. | ||
| Common Stock Distributable | $1,000 | |
| Common StockEquity+ | $1,000 | |
| Reclassify from distributable to issued. | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
Retained EarningsRetained EarningsEquityThe owner’s residual interest in the business. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$15,000.00
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
Normal bal. ▶
$15,000.00
Common Stock DistributableCommon Stock DistributableAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$1,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$1,000.00
$0.00
Additional Paid-In CapitalAdditional Paid-In CapitalEquityThe owner’s residual interest in the business. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$14,000.00
Normal bal. ▶
$14,000.00
Common StockCommon StockEquityThe owner’s residual interest in the business. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$1,000.00
Normal bal. ▶
$1,000.00
DurationN/A
Related Subjects
See Also
- Retained EarningsPart of Retained Earnings
External Links
- Stock dividend — Wikipedia